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Practical Magic

To B or not to B? More tech companies should ask themselves that question

Why venture capital firm Fifth Wall and file-sharing company WeTransfer decided to become Certified B Corporations.

WeTransfer CEO Gordon Willoughby

WeTransfer CEO Gordon Willoughby

Fifth Wall, the biggest venture fund dedicated to funding disruptive ideas in real estate and retail, this week revealed that it has become a Certified B Corporation (B Corp) — a move that requires it to embed concerns about equity, inclusiveness and sustainability into its portfolio.

The disclosure caught my attention not just because it’s a relatively unusual move but because it’s the second company from the tech world that has made such a gesture: WeTransfer, the well-known file sharing service, also has adopted similar changes to its business model. 

For Los Angeles-based Fifth Wall — whose portfolio includes sustainable footwear company Allbirds and "gear for good" company Cotopaxi (both B Corps), smart-bike firm Lime and a slew of other startups that beg my attention — the adjustment reflects that reality that buildings and real estate account for an estimated 40 percent of raw materials consumption and 30 percent of total greenhouse gas emissions. 

"We recognize that today’s announcement is a small step and that there is a lot more work to be done," said Fifth Wall co-founder and CEO Brendan Wallace in a statement. "As a member of the venture capital and technology ecosystems, we're hopeful this commitment will be shared by our peers and ultimately catalyze an industry-wide shift in mindset."

The catalyst was the $200 million Carbon Impact Fund that the firm announced earlier this year — and that is preparing to launch in collaboration its limited partner base, which includes big names such as CBRE, Cushman & Wakefield, Hines and Marriott. 

"What needs to be done is a collective action problem," wrote Fifth Wall partner Tyson Woeste in a blog about the fund. "By convening the world’s largest and most forward-thinking real estate leaders in this alliance, we can collectively take responsibility and bold, proactive actions to identify, develop, and adopt critical new technologies to reduce the industry’s GHG footprint."

Keep in mind that the fund was announced before the COVID-19 pandemic sent shock waves through the real estate world. As the economy restarts, many believe that the sector is in for a massive reboot, as companies reconsider the safety and necessity of mammoth corporate campuses and begin allowing a chunk of their workforce to work permanently from home.

"Over the next few years, sustainability and decarbonization issues will be a dominant theme for every company in real estate and the technology companies that support the industry," Woeste noted this week.

We believe in accountability for the products and technology we put into the world, and we will strive to push our peers to transform our industry into a more responsible one.

Right now, there are an estimated 3,300 Certified B Corps. When I spoke with WeTransfer CEO Gordon Willoughby about why the Amsterdam-based company decided to join their ranks, he said the move created more supervisory clarity. WeTransfer appointed its first non-executive chairperson, British businesswoman Martha Lane Fox, as part of the shift, which took about six months to pull off.

“We believe in accountability for the products and technology we put into the world, and we will strive to push our peers to transform our industry into a more responsible one,” he said in a statement.

To be clear, many of these policies aren’t yet baked into WeTransfer’s strategy. For example, Willoughby told me that the company is in the process of setting renewable energy policies — that plan will include recommendations for sustainable energy suppliers for employees who work at their homes. 

One of the more intriguing policies it already has adopted, however, is a 20 percent discount on advertising rates for other B Corps. Considering that half of WeTransfer’s revenue comes from ad sales, that’s not a token gesture. The company’s original file-sharing service serves about 50 million monthly users, with more than 1 billion files sent per month.

Are these two companies outliers? I prefer to think of them as the leading edge. After all, Danone, the world’s largest B Corp, has proven that it’s possible to make the shift, although it certainly won’t take just six months. Here’s hoping.

This article first appeared in GreenBiz's weekly newsletter, VERGE Weekly, running Wednesdays. Subscribe here. Follow me on Twitter: @greentechlady.

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